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Chiropractor not listed among lawsuit’s more serious charges

Published 9:45am Wednesday, October 16, 2013

A federal lawsuit naming an Albert Lea chiropractor avoids accusing him of more serious allegations.

A federal lawsuit filed Monday accuses a diagnostic imaging company and 46 chiropractors, including one in Austin and Albert Lea, of engaging in an elaborate kickback scheme aimed at defrauding Minnesota’s no-fault insurance system.

Named in the 56-page lawsuit is Albert Lea chiropractor Douglas Edwards of Albert Lea Chiropractic and Austin chiropractor Mark Reeve of Reeve Chiropractic.

The Insurance Federation of Minnesota said the $1.9 million lawsuit against Mobile Diagnostic Imaging Inc., its owner and the chiropractors is the largest no-fault suit since the state’s law was put in place in 1974. It was filed by Illinois Farmers Insurance and its subsidiaries.

The insurance companies allege that Edina-based Mobile Diagnostic Imaging and its owner, Michael Appleman, paid 46 chiropractors kickbacks for ordering MRIs that were not always medically necessary, according to the lawsuit.

The suit alleges Reeve Chiropractic received at least $3,200 in kickbacks from MDI and Appleman from January to November of 2011, and Albert Lea Chiropractic received at least $800 during that same period. Neither chiropractor was accused of some of the more serious charges in the suit, including violations of the federal RICO Act.

The alleged kickbacks were written up as leasing of office items including telephones, fax machines, computer copiers and Internet access, Farmers Insurance alleges, saying that “MDI conducts its scans in a self-sufficient MRI trailer.”

The insurance companies claim from January 2011 until November 2011, Mobile Diagnostic Imaging and Appleman paid $221,800 in kickbacks to the chiropractors and their clinics named in the lawsuit.

Appleman declined to comment Monday.

Edwards on Tuesday said he was unaware of the lawsuit, because he hadn’t been served with the documents, but was aware of the controversy.

“When we first heard there was a problem with this thing, we quit right away,” he said. “That was two years ago.”

Reeve said he hasn’t been served with the lawsuit yet but found out about it Tuesday morning. He said he was advised not to comment.

The allegations reflect what local insurance representatives say is a growing trend of kickback schemes and staged accidents that aim to defraud personal injury protection under Minnesota’s no-fault laws. The law requires insurance companies to pay a minimum of $20,000 for medical expenses regardless of who is at fault in an auto accident.

“Today’s filing of a federal lawsuit reaffirms what our industry has been saying for several years now — that insurance fraud is rampant in Minnesota,” Insurance Federation spokesman Mark Kulda said.